Rishi Sunak hints taxes will go up in March Budget telling Tory MPs that increases now to fill Covid black hole means they can be cut BEFORE the 2024 election
Rishi Sunak has sent out a strong signal that taxes will rise to pay for coronavirus spending in the Budget, telling Tory MPs putting them up now will allow him to cut them to boost the parry’s chances in the 2024 election.
The Chancellor told a meeting of Conservative backbenchers that he wants to be in a position to cut taxes before the vote expected in 2024.
But addressing the 1922 Committee last night he warned that that meant they would have to rise in the shorter term to help alleviate the massive public spending over the past year.
UK national debt is now above £2trillion and fears have been raised about the long-term effect of heavy public borrowing.
But Mr Sunak is facing push-back from business groups and some of his own Tory colleagues who feel it would be more effective to cut taxes to stimulate growth.
One MP at the meeting last night told the Telegraph: ‘Mr Sunak said he wants to be tax-cutting towards the end of the parliament, that there will probably be some rises in the middle, and that we’re going to be frank with people about the tough choices ahead.
‘Obviously everyone in the meeting understood what that meant. Some agreed, some didn’t.’
Government borrowing could be close to £400billion this year and is set to continue at eye-watering levels into the mid-2020s, as this OBR chart shows
Confederation of British Industry today warned against a fresh tax burden on UK businesses.
Some economists have suggested taxes will need to go up for covering the cost of the pandemic, but CBI chief economist Rain Newton-Smith last week said: ‘We don’t see now as the time to be increasing taxes.
‘You need to wait until one or two years after you’ve seen the trough in GDP when growth is back on a sustainable trajectory before really trying to think about either significant cuts in Government spending or significant increases in taxation.’
There has been speculation that a levy of 2 per cent on all goods bought online – potentially raising £2billion a year – could be implemented.
Jesse Norman, Financial Secretary to the Treasury, told MPs last week such a levy is a possibility as Chancellor Rishi Sunak tries to raise money to pay off the UK’s pandemic debt pile.
Mr Norman did not give any detail about what an online sales tax might look like, but the idea was first suggested when the Treasury reviewed business rates in July.